Business, 18.06.2020 22:57 levicorey846

EcoFabrics has budgeted overhead costs of $1,096,200. It has allocated overhead on a plantwide basis to its two products (wool and cotton) using direct labor hours which are estimated to be 522,000 for the current year. The company has decided to experiment with activity-based costing and has created two activity cost pools and related activity cost drivers. These two cost pools are cutting (cost driver is machine hours) and design (cost driver is number of setups). Overhead allocated to the cutting cost pool is $417,600 and $678,600 is allocated to the design cost pool. Additional information related to these pools is as follows Wool Cotton Total
Machine hours 116,000 116,000 232,000
Number of setups 1,160 580 1,740
1. Calculate the overhead rate using activity-based costing.
2. Determine the amount of overhead allocated to the wool product line and the cotton product line using activity-based costing.
3. Calculate the overhead rate using traditional approach.

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EcoFabrics has budgeted overhead costs of $1,096,200. It has allocated overhead on a plantwide basis...